Serious Fraud Office Supplementary Estimate 2013-14 - Justice Committee Contents

1  Report


1. The Supplementary Estimates for 2013-14 laid by the Treasury on 12 February 2014 included one for the Serious Fraud Office comprising £19 million for additional departmental expenditure limit (DEL) resource provision.[1] The ambit of this Supplementary Estimate is:

    administration of The Serious Fraud Office (SFO) offices; capital costs and operational costs incurred including costs of staff, fees to Counsel and outside accountants, witness expenses, use of information technology to improve presentation of evidence, other investigation, prosecution and litigation costs, defendants' costs and damages ordered by the court to be paid by the SFO, and associated non-cash costs falling in DEL.[2]

2. The size of the Supplementary Estimate is considerable in relation to the SFO's budget for 2013-14. It represents an increase of 52% in the SFO's resource requirement for the year from £36,607,000 to £55,607,000. The SFO has already drawn down £11 million from the Contingencies Fund to meet its expenditure requirements[3], and will be repaying that money from the Supplementary Estimate provision once it has been approved by the House. The SFO also received £5 million additional funding as part of the Main Estimate process for 2013-14, so in total it will have received £24 million extra in this financial year.

3. The Estimates Memorandum provided to us by the SFO was terse in its explanation of the reasons for the need for the additional provision. It said the money was needed "in respect of the Tchenguiz litigation, to meet other legal liabilities, to provide additional funding for the LIBOR investigation, and to provide additional funding for two further significant investigations".[4]

4. We wrote to the SFO seeking further information on the reasons for the Supplementary Estimate, and they responded by means of a letterfrom the Director, David Green CB QC, dated21 February. We have agreed with the SFO to keep confidential information in this letter which might, if published, be of assistance to suspects in criminal investigations or to parties in litigation, and we are therefore publishing it with redactions.[5]We are grateful to the SFO for responding so promptly to our request for further information.

5. In his letter Mr Green explains the context of the £24 million additional funding received by the SFO in 2013-14:

    This funding reflects the arrangement through which "Blockbuster" cases are supported. It is in the nature of the SFO's work that significant additional funding can be required at short notice. In a very short space of time, it can become clear that an investigation, as wide as that into Libor, is required. At the same time, I consider it would be unacceptable to have expert investigators, lawyers and accountants as permanent employees waiting around in case such an investigation is required.[6]

He adds, however, that he is keen that an "appropriate and more certain funding model can be agreed by all those with an interest".[7]

6. We note that some arrests have been made and some criminal charges have been brought as a result of the SFO's investigations. We also note that a civil case for damages has been brought against the SFO in the Tchenguiz case, which has been running for several years and pre-dates the current Director taking up his post.. We make no comment on these matters.


7. The magnitude of the SFO's request for additional resources by means of a Supplementary Estimate, when considered against the size of the Office's budget, is a cause of considerable interest for us, and we consider that the Supplementary, and the funding arrangements for so-called Blockbuster cases which underlie it, are matters which should be drawn to the attention of the House before it is asked to approve the Estimates. We intend to pursue with the Attorney General the question of whether he considers that the current funding arrangements of the SFO are sustainable.

1   Central Government Supply Estimates 2013-14: Supplementary Estimates and New Estimates, HM Treasury, February 2014, p. 367 Back

2   Ibid Back

3   Written Statement, Serious Fraud Office (Contingencies Fund Advance), HC Deb, 30 January 2014, col 39WS Back

4   Page 5 Back

5   Pages 8 and 9 Back

6   Page 8 Back

7   Page 9 Back

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Prepared 28 February 2014